Management bodies of highrise residential buildings may be compelled to increase their maintenance charges by between three and six percent from April, once the GST is implemented.

This estimate by the Joint Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector Malaysia (Peps) is based on the government's decision to make management fees of such properties GST-exempt.

Peps adviser Wong Kok Soo ( left ) said despite being exempted from the goods and services tax, home owners would still have to bear the cost of input taxes charged through their service providers, contractors, suppliers and utilities that would be introduced under the GST.

Wong said currently, statutory bodies such as Joint Management Bodies (JMB) and Management Corporations (MC) already levy a six percent sales tax on their existing fees.

"Therefore, the GST of six percent will not have any effect on the 50 percent of the expenditure as it only replaces the current sales tax.

"Service providers, contractors, suppliers and utilities fees, which account for another 50 percent of the total expenditure, are exempted from the six percent sales tax, and therefore, with a similar percentage of GST tax, the increase will be of three percent only," he said.

Nonetheless, Wong said, consensus can be reached between the statutory bodies and home owners on the percentage increase of the maintenance fee at a general meeting.

"No worries, they (parcel owners) can choose to vote (against the increase) at the general meeting if they feel that the increase is too high," he said.

Change collection method

Wong said this during a briefing for the press on the results of the meeting between Finance Ministry officers and representatives of Peps, House Buyer's Association (HBA), Royal Institution of Surveyors Malaysia (RISM) and Malaysian Insitute of Professional Property Managers (MIPPM).

The meeting was held to discuss the Finance Ministry's response to the group's petition on amendments to the Goods and Services Tax Act 2014.

The groups had petitioned Prime Minister Najib Abdul Razak to make maintenance fees of stratified properties a 'zero-rated' item under GST, instead of the standard rate of six percent.

Collectively, they represent six million parcel owners and occupiers of about 15,000 stratified development areas in West Malaysia.

On Jan 5, the government said the GST exempt supply category will also include all residential stratified properties.

The amendment will be made accordingly to paragraph 20, Second Schedule, Goods and Service Tax (Exempt Supply) Order.

Meanwhile, HBA secretary-general Chang Kim Loong ( right ) suggested that maintenance fees for low-cost flats be included in the assessment tax, due to a high number of defaulters.

"The maintenance fee only costs around RM15 a month, but some of the residents did not even bother to pay it. So, why not let the local authority to take over the job?” Chang said.

"This will increase the efficiency of the management," he added.